Fire up the grill: Propane prices haven't started summer this low since the Covid-19 lockdown three years ago.
A lot of the heating fuel was left over after an unusually warm winter , while record output from natural-gas drillers and oil refiners has offset record exports. Propane prices in commodity markets are more than 50% lower than a year ago and about $1 a gallon less than the pandemic peak.
Propane cost 60 cents a gallon this past week at the trading hub in Mont Belvieu, Texas, where benchmark prices are determined for futures traders, exporters and Gulf Coast chemical makers. It hit 58 cents Friday at the Kansas market that influences what a lot of farmers pay for propane that they burn to dry autumn harvests.
Residential prices aren't tracked in the spring and summer as closely as they are during the heating season, when millions of mostly rural Americans rely on propane to warm their homes, cook and shower in hot water. But consumer prices have eased. On New York's Long Island, the average price in April was $4.16 a gallon, down from $4.34 in May of 2022, which was the highest price in 25 years of state energy data.
Declining prices are great news for the roughly 5% of Americans who rely on propane to heat their homes—not to mention grillers, forklift operators, patio restaurants, owners of heated pools and other summer propane burners.
Cheaper propane should also ripple through plastic supply chains. Huge volumes are used to make polypropylene, which goes into automobiles, appliances, packaging and carpet.
As recently as 2009, the U.S. was a net importer of propane. The shale-drilling boom changed that . In 2013, the U.S. overtook Qatar as the world's biggest propane exporter. A few years later the U.S. was shipping more propane than the entire Middle East.
Propane exports hit a record of nearly 1.7 million barrels a day in March, twice the volume five years earlier, according to the Energy Information Administration. Federal estimates suggest that the volume shipped abroad has declined in recent weeks, but not by much.
Export capacity has basically maxed out at times this year. The continuing widening of the Houston Ship Channel will increase the number of big tankers that can be floated out of Texas full of propane. Houston's Enterprise Products Partners, which ships more propane overseas than any country besides the U.S., is adding equipment to boost its export capacity there by 170,000 barrels a day.
Domestic inventories were robust when Covid hit three years ago and shut down the economy. Prices crashed. Drillers idled rigs and refineries dialed back because so few were driving . Yet propane consumption around the world held steady .
At home, Americans burned more than normal . There was a run on patio heaters, and homes were warmed when people normally would have been at work. Overseas, people kept cooking and many of Asia's petrochemical plants kept running because of the complexity of shutting them down.
Exports drained supplies and prices shot toward records. Last fall, federal officials worried that many Americans might not be able to afford to stay warm . Budget strains were eased by abnormally warm weather, especially in the northeast where propane heat is most popular.
Suburban Propane Partners, which supplies about a million homes and businesses in 42 states, has made up for some lost winter sales this spring thanks to unseasonably cool weather, said Chief Executive Michael Stivala.
He said he expects production to remain strong enough to build stockpiles even higher before autumn. Domestic propane stocks finished 44% higher in the week ended June 2, compared with a year earlier, according to the EIA.
"We're going to retain a fair amount of inventory in the U.S.," Stivala said. "If we're tracking at this level, that should translate to lower prices."